The rupee recovered by 9 paise to close at 74.38 (provisional) against the US currency on Wednesday, snapping it two-day losing run ahead of the US Fed policy decision.
Forex traders said the rupee is trading in a narrow range ahead of the monthly expiry and the US Fed's policy decision.
At the interbank foreign exchange market, the local unit opened at 74.44 against the dollar and witnessed an intra-day high of 74.31 and a low of 74.49 during the session.
The local unit finally ended at 74.38, higher by 9 paise over its last close. On Tuesday, the rupee had settled at 74.47 against the US dollar.
"Indian rupee appreciated after two days of minor weakness amid month-end adjustments," said Dilip Parmar, Research Analyst, HDFC Securities.
So far this week, the rupee has been consolidating in the range of 74.30 to 74.50, looking for a fresh trigger to get a clear direction.
"Investors focus will remain on today’s Federal Open Market Committee(FOMC) meet. We don’t see any meaningful moves on dollar crosses today as the outcome will come mid-night and investors will stick to their wait-and-see approach. The bias is for a bid dollar given the risk of some modest hawkish bias from the FOMC," Parmar said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.07 per cent to 92.49.
On the domestic equity market front, the BSE Sensex ended 135.05 points or 0.26 per cent lower at 52,443.71, while the broader NSE Nifty declined 37.05 points or 0.24 per cent to 15,709.40.
Global oil benchmark Brent crude advanced 0.77 per cent to USD 75.05 per barrel in futures trade.
Meanwhile, foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 1,459.08 crore, as per exchange data.